It was his biggest gamble, and its implementation — just like its ideation and banking on it for his presidential election — is proving to be an even bigger gamble.
President Ruto fashioned his campaign around the “hustler” narrative in an attempt to move away from the usual ethnic and regional mobilisations.
Billing the contest against his political friend-turned-foe Azimio leader Raila Odinga as a “hustlers versus dynasties” duel, he mobilised and organised his political base along the dominant socio-economic cleavages.
He then promised a Sh50 billion Hustler Fund to the youth and, casting himself as a “hustler”, the Kenya Kwanza leader rode the class narrative wave to State House.
In a Cabinet dispatch last evening, the government described the Hustler Fund as the “administration’s answer to predatory lending that historically has denied many households an opportunity to make their rightful contribution to nation-building”.
“The fund is expected to offer much-needed relief and a new lease of life to over eight million Kenyans who had been blacklisted by various credit rating agencies. Besides being accorded a second chance to access the credit needed to grow their enterprises, the Hustlers Fund also offers affordable credit by charging of interest of 0.002 per cent per day, which is 500 times cheaper than the cheapest current products which range between one per cent to 10 per cent per day,” the Cabinet said in its memo.
Dr Ruto’s State House also praised the pensions savings angle to the fund, saying it will “herald a new era by according all Kenyans an opportunity to contribute to their pension savings within every financial transaction that they make.
“That dynamic savings platform offers a return of 50 per cent on individual savings by way of government counterpart funding. This means that for every Sh2 saved, the government will contribute Sh1,” the Cabinet said in the memo.
All four products of the Hustler Fund — credit, savings, pensions and investments — will be delivered electronically, the Cabinet decided.
“There will be no requirements to fill any manual forms or to secure any third-party guarantors. As such, the Hustlers Fund will be delivered without any bureaucracy,” the Cabinet said.
Murang'a County Commissioner Karuku Ngumo (right) and his Nyeri counterpart Mohamed Barre among attendants of the public consultative forum on the proposed Public Finance Management -Hustlers Fund, Regulations, 2022 at Quo Vad Youth Hub in Nyeri on November 15, 2022.
Photo credit: Joseph Kanyi I Nation Media Group
During the campaigns, Dr Ruto said the hustler fund would not charge any interest on loans in line with its objective of providing cheaper credit for micro and small businesses.
However, that has changed, with the President first saying the fund will no longer be free money, but the loans will attract an interest of eight per cent a year.
The loan limits for the fund were set at a minimum of Sh500 and a maximum of Sh50,000.
Further, getting the amount is dependent on the borrower’s credit score, such that individuals with poor credit scores will be charged higher interest, plus possible penalties.
President Ruto on Monday announced his administration would advance Sh300 million of the fund to Twiga Foods — an agri-tech company — to lend to its customers and suppliers in a move that was thought to be a deviation from the original plan.
The announcement came just months after the company expanded its business with a Sh1.6 billion investment.
“The Sh300 million that you lend to your 140,000 suppliers and customers across Kenya, we are going to make that amount of money available to you so that they can borrow at lower rates and hopefully increase their earnings,” said President Ruto.
The mutation of the fund has been met with sharp criticism, with some quarters terming it a “government Fuliza” in reference to the popular overdraft facility, Fuliza, through which Kenyans borrow Sh1.6 billion daily on their phones.
Economist Mohamed Wehliye said the fund’s loan limit is too small, yet it is meant to be a capital loan to start or expand businesses.
“You cannot borrow from the Hustler Fund on a daily basis like you borrow from Fuliza. In my opinion, a maximum ticket of Sh50,000 for hustlers and hustler micro, small and medium enterprises for loan capital is, therefore, too small to make an impact,” said Mr Wehliye.
National Assembly Minority Whip and Suna East MP Junet Mohamed termed the fund a complete hoax, saying hustlers were hoodwinked to believe the fund was a zero-interest and non-refundable fund to start their businesses, but now it is actually a loan at an interest rate of eight per cent.
Vihiga Senator Godfrey Osotsi said there is nothing unique about the proposed fund as compared to already existing funds like the Uwezo Fund and the Women Enterprise Fund.
Nairobi Senator Edwin Sifuna said: “This is just Fuliza run by the government. They said there will be no interest, now they have put the interest at eight per cent. What is the difference between it and Fuliza?”
